Color Overheads Lesson 1

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Begin by Planning Today
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Lesson Overview

• Decisions made today impact your future financial
  freedom
• Begin with basics
• Time and money
• Tax-advantaged investments
• Where will money come from?
• Resources

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Will You Be Free?

• Some say freedom is having enough money to do
  what one wants.
• What do you want to do in retirement?
• - Travel
• - Pursue dreams
• Plan today to secure dreams!

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Planning Pays Off

• Workers who plan for retirement
• Are more likely to save
• Save more or change their investment allocation.
• Accumulate more total funds
• - 2002 Retirement Confidence Survey

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• Your plan cannot be perfect,
• but
• an imperfect plan
• is much better than
• no plan at all!

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First Things FirstBuying your future begins with
the basics

• Estate plan
• Investment plan
• Home ownership
• Adequate insurance
• Emergency fund and credit access
• Solvency

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Sources of Retirement Income

• Employer
• Social Security
• Personal retirement investments
• Work in retirement

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Time and Money

• Three 22 year-old investors
• A invested 2,000 per year for 5 years
• B waited 10 years, then invested 2,000 a year
  for 35 years
• C invested 2,000 per year every year

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• Age 66, balance 607,887
• Age 66, balance 596,254
• Age 66, balance 1,581,591
• (all at 10, tax-deferred, invested at
  beginning of each year)

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Monthly Investment to Achieve 100,000 Lump Sum
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Monthly Investment to Achieve 100,000 Lump Sum
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Monthly Investment to Achieve 100,000 Lump Sum
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Factors that Affect How Your Retirement Nest
Egg Will Grow

• Amount you invest
• How soon you get started saving
• Rate of return
• Whether taxable, tax-deferred, or tax-free

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Tax-AdvantagedInvestments

• 401(k) and 403(b) retirement plans
• IRA
• Roth IRA
• Annuities

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Do You Know Your Net Worth?

• Everything you own
• Everything you owe
• Net Worth

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Where Will Money For Your Nest Egg Come From?

• Do you spend less than you make?
• Does your employer offer a retirement plan?
• Do you take advantage of employer match?

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Where Will Money For Your Nest Egg Come From?

• Have you plugged your spending leaks?
• Could you drive your car an extra year?
• Do you pay cash and save the interest cost?

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Establish a Spending Plan

• Track your spending for a month.
• List occasional expenses.
• Add for goals (short, intermediate, and
  long-term). Be sure to include a retirement goal.

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Learn more about planning your financial future!

• Additional publications in this series
• Extension publications
• Investing for Your Future web course
• http//www.investing.rutgers.edu
• Financial books from public library

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